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Friday, March 29, 2013

Aegis Logistics is one of the largest private sector
chemical,gas and oil logistics company operating in India.Currently company
having two liquid terminals in operation at Mumbai and one at Cochin and it is
also starting one more at Pipavav.
Recently company started the civil works for its Pipavav facility and on
completion of this the total liquid terminal capacity will reach close to
500000 KL.Under the Gas division ,company offering gas transportation for third
parties,running Auto Gas retailing Stations and supplying commercial LPG Cylinders.Aegis having a
capacity to handle 750000 Mt of LPG per annum in its facilities. Presently
company operating more than 90 auto gas filling stations ( Aegis Autogas) across 7 states and planning to add another 30
in near future.Aegis already established direct pipeline connectivity with its
major industrial customers and its year long experience in this field is very
crucial and positive factor in an industry
like this where lot of procedures and formalities are required to get
permission from government authorities to start with.In 2012 company started
bunker fuels to ships and planning to introduce the same facility at more
locations.For the past few quarters company’s financial performance negatively
affected by hedging loss which is expected to end by the new financial
year.Moreover , government's decision to restrict the supply of subsidised gas
will boost the prospects of its various business divisions. Company having an
uninterrupted dividend paying record for the past 10 years and reporting decent
numbers. I believe .company’s decisions to expand its capacity adding new offerings in its
portfolio and changing government policies will auger well for Aegis once there
is some improvement in the over all revival in our economy. Recommending a BUY
on Aegis in a staggered manner with a long term view at CMP or in any dip below CMP of Rs.125.

Saturday, March 23, 2013

Our economy and stock market is going through a rough
patchfor the past many months ( not the
indices) .Reasons may vary from weak government,policy paralysis,higher
inflation,current account deficit ,crisis in power supply,mining ban
,additional supply of PSU shares ..etc.etc.In mid and small caps space a real
carnage is going on where stock prices of many companies ruling around life
time or multi year lows.In addition to the above mentioned reasons , I believe
one of the major factors affecting the sentiment in small/mid caps is the uncertainty created by the latest SEBI decision to change the trading method
for illiquid stock.( not the method but the criteria for fixing the eligibility
is the real reason for concern).It seems all market participants including
stock exchange authorities,brokers and investors are in full of dark and no
clue about the impact of this method on volume and price .I think ,this uncertainty is a major reason for the sharp fall in small/mid caps in past few
weeks .There is no takers and hence no market depth for midcaps .Many of the
investors are in a wait and watch mood and not ready to take any new
commitments before some clarity emerges even they know the fact that many good
companies are trading at attractive valuations.This is the feeling many of my
friends shared in recent weeks .Some investors even selling their holdings and
shifting their positions to other stocks which may excluded from new method
based on the declared criteria. I believe ,SEBI is actually ‘burning the house
to kill a rat’ .Let us wait one more week and see its implications.

This week’s recommendation is a low priced scrip which is
not an illiquid stock under new criteria
!! .Reason is not this alone but some more
positive developments happening in this
company after a long period.MARKSANS PHARMAis
owned by Mr Mark Saldhana , the younger brother of the MD of Glenmark Pharma
.Actually the name GLENMARK derived from the name of two brothers GLEN Saldhana
and MARK Saldhana.In 2003 Glenmark Pharma’s wholly-owned subsidiary Glenmark
Laboratories de-merged from it and later in 2005 this division merged with another
listed company Tasc Pharma .Then its
name changed to the present one MARKSANS PHARMA and Mark Saldhana took charge
of this company.Company’s performance was satisfactory till 2008 and thereafter
derailed due to different reasons.It
raised FCCB for overseas buyouts and took over some foregin companies in UK and
Australia which did not perform initially, as expected.FCCB holders not
converted their bonds due to lower stock
price and the repayment of the same ends as a huge burden on the company. As in
the case of many other company’s issed FCCB’s during that period ,Indian
currency’s diminishing valuation added fuel to fire.

When we analyse
in detail,it is clear that the two major reasons for huge loss in past many
years and complete erosion of net worth
of this company is FCCB obligation and loss of its API division. Last year company exited from API and sold out this loss making unit.In a surprising
announcement ( Read it HERE) ,in this month , company
informed BSE that it has entered into a Settlement Agreement with
the holders of Foreign Currency Convertible Bonds.Even the nature and means of this
settlement not explained,MD's open market purchase of shares in the past few days indicating they have reached in a favorable settlement terms for the company and some clear ideas in mind.Last year promoters subscribed preferential issue and hiked their
stake to 51% from 48% .

After selling out its API division, company now concentrating in Formulations,CRAMS and
Bio pharmaceuticals . Oncology, Gastroenterology,
Antidiabetic, Cardiovascular, Pain Management, and Gynecology are selected as key areas of interest.Of late
company’s Australian Subsidiary( Link HERE) is also started to perform . Since company’s
foreign operations are bigger than Indian business ,true picture is not
reflecting in its stand alone result.Its consolidated Sales was Rs.357 Cr where
sales from India was just Rs.156 Cr in FY 2012. In the just preceding two quarters,both Indian and foreign
operations are showing significant improvement.

This low priced scrip selected
mainly because of four reasons –
Pedigree of promoter,Fair chance for a Settlement of FCCB with favorable and practical terms and conditions , Improved financial
performance,promoter’s effort to increase stake through preferential issue and
open market purchase.We know last year’ fantastic turn around of another big
pharma company started only after a similar settlement of FCCB obligation.Let
us wait and see what will happen for this one.Those willing to take extreme
risk and enough patience may try it around CMP Rs.4/- .Stock listed both in NSE and BSE.

Saturday, March 16, 2013

I have recommended a BUY on AVANTI FEEDS @ Rs.68 on September13,2011.(Old Posting HERE)
.Subsequently recommended to book profit from it @ 203 for a re-entry below Rs.150 ( Link HERE) .Now stock corrected substantially and currently trading around Rs.109 . Requesting to re-enter now and HOLD the same for long term

Saturday, March 9, 2013

Even if it is exhibiting the tendency of cyclical nature,Engineering and Capital goods industry is the back bone of any growing economy . In our country most of the companies operating in this sector is currently facing serious challenges due to lower order book position and delay in execution .Reasons are many like slowness in implementing government policies,intervention of courts,shortage of power,higher interest rate ..etc ..etc.Even in the past, this industry faces these type hiccups many times and later came out of such bad situations.Most of the listed companies from this space are long existing in the same industry and the management of such companies already experienced many such ups and downs.Share price of many companies are now ruling at attractive valuations for genuine long term investors.Negative sentiment is surrounding this industry and everyone is in a hurry to dispose even quality stocks from this sector at throw away price, thinking there is no tomorrow .Considering the volatility and panic gripped in the mid/small caps one can't say they will not go down further .But in practical it is very difficult to catch everything at bottom and no meaning in waiting for that .One strategy we can adopt in such a situation is - accumulating small lots of quality stocks in a phased manner and thus keep our average at reasonable level.Such a method will help us to reap the benefits when the industry starts its come back and at the same time avoid the possibility of sleeplessness during testing times.Waiting with patience may be longer but the reward will be equally big.
TRF @ Rs.167,TIL @ Rs.160,InternationalCombustion @ Rs.167 ,Tecpro Systems @ Rs.109 ,CMI FPE @ Rs.475,Eimco Elecon @ Rs.153 ,Ingersoll Rand @ Rs.400 ..etc are some stocks falling in this category. One thing is very important- no meaning in looking at the trading screen from the very next day onwards after the purchasing these stocks .I believe it is the time to become greedy in this sector and not fearful.

Saturday, March 2, 2013

Abbot India - a 75 % subsidiary of Illinois basedAbbott Laboratories -operating in
pharmaceutical, nutritional and diagnostic segments in India.Company is one of
the best MNC pharma company currently available at attractive valuation. In
past few years ,parent company is very aggressive in India to expand its business.As
part of its global integration in 2012 Abbot India merged Solvay India with
itself.Abbot group operating in India through three units viz Abbott India, Abbott Healthcare and Abbott
True Care.In these days , many MNC pharma companies are keen only to develop
their unlisted arms and ignoring the listed units .But Abbot is an exception
and the parent is taking equal efforts to grow all of its units .The listed units concentrating in pain management, gastroenterology,
thyroid and anesthesiology and Its main
brands includes Brufen, Digene , Forane..etc.
For FY 2012 Company reported a turnover of Rs.1652 cr ( Rs.1477 Cr in previous
year) and a net profit of Rs.145 Cr ( Rs.120 Cr) .EPS was Rs.68 and declared a
dividend of Rs.17. A good stock for investment @ CMP Rs.1360 for long term investors. .